Retail Inflation Rises To 8-Month High Of 4.82% In August On Higher Food Prices

India’s retail inflation increased to an eight-month high in August as rising food prices continued to strain household budgets. Consumer Price Index (CPI)-based inflation rose to 4.82% from 4.45% in July, keeping headline inflation above the Reserve Bank of India’s medium-term target of 4%.

The latest data marks the third consecutive month when CPI inflation has remained above the RBI’s target. Inflation had increased from 3.93% in May to 4.38% in June and further to 4.45% in July.

Food prices drive inflation higher

Food inflation emerged as the key factor behind the increase, with the Consumer Food Price Index rising to 5.95% in August from 5.52% in July. Rural food inflation stood higher at 6.13%, while urban food inflation was recorded at 5.64%.

Several essential food items witnessed sharp price increases. Onion inflation more than doubled to 48.27% in August from 22.54% in July, while garlic prices rose 43.60%. Ginger prices remained elevated, with inflation at 73.82%.

However, some vegetables offered relief, with tomato prices declining 31.09% year-on-year and potato prices falling 13.14%.

Rural inflation increased to 5.23% from 4.84%, while urban inflation rose to 4.31% from 3.96%.

RBI policy outlook in focus

The August inflation reading will be closely watched ahead of the RBI Monetary Policy Committee’s October meeting. The September inflation data will be released only after the policy review.

At its previous meeting, the MPC kept the repo rate unchanged at 5.25% and maintained a neutral stance.